SWOT Analysis – Understanding Your Business

Last Updated
August 22, 2009


It has always been important for a business to know and understand how it fits in and interacts with the surrounding environment on both an internal (office/factory/shop environment) and external view (how your business operates with the outside world).

Researching your environment will benefit you and/or your management team by putting you in a position to develop a strategy for both the long and short term.

Analyzing the Business

The most influential way of doing this is to perform a SWOT analysis of the company. It is a common phrase used to abbreviate Strengths, Weaknesses, Opportunities and Threats.

Each term is a heading for a separate analysis of the business but they can be related as seen below:

Strengths provide an insight to your business opportunities & weaknesses in your business can cause immediate threats

A guideline of how to carry out the analysis is explained in the next section, but it is important to know that the SWOT analysis is only based upon information that is known by the assessors (you), and is seen as perhaps the more basic approach of analyzing a business’ position: but SWOT is still a powerful tool when looking for immediate benefits.

Performing SWOT

Recognizing the Strengths and Weaknesses before tackling the Opportunities and Threats is the best way to approach the analysis: the more Strengths and Opportunities the better they can both be seen as the bigger influences for the success of your company. You need to be aware that the most important rule is not to leave anything out no matter how small the issue may be.

There is no fixed way of doing a SWOT analysis, but it should be done in a way that you feel most comfortable with, and more importantly that you understand it. The objective is to be in a position where you can determine a strategy for the future to improve your company’s overall performance (or maintain it if you are happy with your final analysis).


The Strengths can be considered as anything that is favourable towards the business for example:

  1. Currently in a good financial position (few debts, etc)
  2. Skilled workforce (little training required)
  3. Company name recognized on a National/Regional/Local level
  4. Latest machinery installed
  5. Own premises (no additional costs for renting)
  6. Excellent transport links (ease of access to/from the Company)
  7. Little/non-threatening competition


Recognizing the Weaknesses will require you being honest and realistic. Don’t leave anything out as this is an important part as to realize what needs to be done to minimize this list in the future. Here are a few examples:

  1. Currently in a poor financial position (large debts, etc)
  2. Un-Skilled workforce (training required)
  3. Company name not recognized on a National/Regional/Local level
  4. Machinery not up to date (Inefficient)
  5. Rented premises (Adding to costs)
  6. Poor location for business needs (Lack of transport links etc)
  7. Stock problems (currently holding too much/too little)
  8. Too much waste

Article Index

  1. SWOT – Weaknesses and Strengths
  2. SWOT Analysis - Opportunities and Threats
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